Photo: From a hiring campaign at Pagosa Springs Medical Center during the COVID crisis.
At the Monday, March 31 public presentation, Pagosa Springs Medical Center (PSMC) Chief Financial Officer Chelle Keplinger discussed the financial crisis that may hit American hospitals if all the funding changes proposed by the Trump administration go into effect. Ms. Keplinger presented a “worst case scenario” to an audience of about 100 people at Pagosa Peak Open School, estimating a potential loss of revenue to PSMC of around $4.3 million.
PSMC’s annual revenues last year were about $45.4 million. About $2.4 million of that amount came from property taxes.
The audience wondered, of course, what the plan was for addressing a loss in income at PSMC. It’s not easy being an independent hospital in a national landscape where many hospitals are part of a larger healthcare “system”. One option for the future is to allow an outside health care system to take over PSMC. CEO Rhonda Webb stated that this was not a desired option currently, but it’s one element in the discussions at the Board level.
Another option suggested by an audience member: ask the voters to increase their property tax mill levy.
CFO Chelle Keplinger:
“We thought about it, but we really don’t think it’s the right time. You know, everything is going up, food prices are going up… people are struggling. And it’s a tax-adverse community. We don’t think the timing is good.”
CEO Rhonda Webb:
“I hate this topic — almost more than anything. And it is about TABOR and being ‘de-Bruced’. I still don’t quite understand it, but in about a year, you’re going to be voting on TABOR and de-Brucing. And we would beg you to do what you need to do on that, because we do need all the tax money we can get…”
The Taxpayers Bill Of Rights — a 1992 amendment to the Colorado Constitution — limits the amount of annual increase a government can collect and spend, according to a complex formula based on population growth and inflation. Any amount of property tax collected in excess of the limits must be returned to the taxpayers.
But many local government entities have asked the voters to release them from TABOR limits, and in many cases, the voters have accommodated them. Here in Pagosa Springs, some of the governments free from TABOR limits include the Fire District, the Library District and the San Juan Water Conservancy District. The removal of limits is called ‘de-Brucing’ in honor of the architect of the TABOR amendment, Colorado politician Douglas Bruce.
The Archuleta County government is still limited by TABOR, as is Pagosa Area Water and Sanitation District (PAWSD). As currently practiced, the limits apply to property taxes, but not to sales taxes.
Constitutional amendments cannot be overturned by the state legislature, but can be repealed by the voters.
Can an amendment be overturned by the Colorado Supreme Court?
After weeks of Colorado Democrats in Denver suggesting they’d be open to changing the 1992 TABOR amendment, some lawmakers are now seeking a lawsuit to overturn it.
Increased demand for long-term care through Medicaid is a primary driver of Colorado’s pending budget deficit, and lawmakers in Denver lament that spending caps don’t allow them to keep up with inflationary pressures in the health care industry — which outpaces the statewide inflation rate upon which TABOR is based.
The Colorado legislature is currently considering a joint resolution, HJR25-1023, which would direct the General Assembly’s legal team to “determine the constitutionality of the Taxpayers Bill of Rights, section 20 of article X of the state constitution.”
Maybe I’m ignorant about what a constitution is, but I don’t fully understand how a part of the constitution, properly approved by the voters, could be ruled “unconstitutional”. That is to say, how can a part of the constitution violate the constitution? But our legislators get paid the big bucks to think outside the legal box.
But we’re talking right now about PSMC.
CEO Webb said her Board is considering a local request, to de-Bruce PSMC. Then the hospital could grow its annual property tax revenues without limits, as property values increase. In essence, de-Brucing typically causes a property tax increase with changing the mill levy rate.
Assuming property values, and taxes, increase? They actually fell in 2010 during the Great Recession.
CEO Webb:
“It’s just… so many people are struggling right now. It just didn’t seem like the right time. I know we talk about people on fixed incomes, with expenses that are really high, and they’re not getting a big increase from Social Security. There are a lot of people like that. And they’re already paying more property taxes.”
Recent increases in Archuleta County property valuations caused PSMC tax revenues to increase from $1.2 million in 2019 to about $2.4 million in 2024.
CEO Webb told the audience that grant funders and Congressional leaders are sympathetic to the financial challenges faced by PSMC, but “we’re getting told by them, that we need to go back to our people and ask for an increase in our mill levy. So we’re aware of that. We just didn’t think the timing was correct…”
I mentioned in Part One, some of the various government entities currently discussing major capital projects, to be potentially funded by tax increases. New replacement school buildings. A new County administration building. A massive overhaul of the Town’s sanitation system. Ongoing upgrades for PAWSD water and wastewater systems. New firetrucks for the Fire District. Municipal upgrades to downtown Pagosa connected with the current highway reconstruction. A County transit facility that ran significantly over budget. New equipment and buildings at PSMC. An expansion planned by the Sisson Memorial Library. A new riverfront park planned by the Town Council…
While the costs for everyday expenses — rent, medical care, food, clothing — continue to rise.
Who exactly can afford all of these planned government projects?
Maybe the PSMC Board is right. Maybe it’s not the right time to ask for a tax increase of PSMC.
Maybe… wait a year?